Should the US Tax Mileage or Fuel?: Guest Analysis

The government's push to raise mpgs may have a disturbing, unintended consequenceÂ—deteriorating highways. As a growing number of drivers buy more efficient vehicles, revenue from the federal gas tax will continue to fall, leaving government officials with a funding gap for highway maintenance. Nick Chambers, the editor of Gas 2.0 takes a close look at some of the high-tech and low-tech ideas that are being talked about now, including a controversial mileage tax.

The road trip--driving cross-country for days on end, crammed into a vehicle with your family--is virtually a required rite of passage for most Americans. The lure of the open road is as ingrained in our psyche and culture as the hamburger, football or fishing. So it's no surprise that proposals for new types of taxes on these seemingly free highways--traditionally paid for by gas taxes and tolls--are causing an uproar.

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Back in July of this year, Rep. Earl Blumenauer (D-Oregon) proposed a bill that allocates funds to research the effectiveness of taxing highway usage by the mile. On the surface, the bill seems to be laying the groundwork for big government to track our driving habits while simultaneously discouraging the driving of more fuel-efficient vehicles. It doesn't have to be this way.

Most road maintenance and upgrades in the U.S. are currently paid for with fuel taxes. It has been that way for a long time. In fact, Oregon started the trend of taxing gas back in 1918 and the Federal government followed suit in 1932. For the most part, the system has kept roads and highways maintained and in working order. However, since the 1970s, average vehicle fuel efficiency has been going up even as we've put more vehicles on our roads. Over time, this trend has caused fuel tax revenues to decline per vehicle, which poses a problem for road maintenance and upgrades.

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Some say that the solution is simply to raise our gas taxes much higher--by a dollar or more per gallon. But this solution doesn't address the base problem: With the country focusing on using less or no oil-based fuel, gas taxes are an inflexible system of revenue generation. Increasingly, fuel usage has little correlation to actual road use. The ultimate example of that is the electric car; if it has enough range, it could drive a lifetime and the owner would never pay a penny in gas taxes.

According to others, the only equitable way to make sure that every vehicle using our roads is paying proportionally for the maintenance of them, is to charge on a per-mile-driven basis--a mileage tax.

Some states, like New Jersey, grasped the shortcomings of the gas tax early on and began developing an extensive network of tollbooths as a solution. Tollbooths are a way of collecting mileage taxes--you get tagged when you enter the toll road and pay up when you exit.

Tollbooths do a relatively good job of protecting privacy. However, New Jersey's system is cost inefficient, and requires extensive infrastructure, money and personnel to operate, says James Whitty, who is manager of the Oregon Department of Transportation's Office of Innovative Partnerships and Alternative Funding and co-author of a detailed paper on the subject of mileage taxes to be published this October by the federal Transportation Research Board.

Oregon, on the other hand, grasped the gas tax problem relatively late, but has been playing serious catch-up. For the last eight years James Whitty's office has been researching, developing and testing what it calls a "Mileage Fee Concept" (pdf). Nothing has been turned into law yet, but at a basic level, the idea is to collect information from cars wirelessly, sharing the number of miles they've driven over a Web-based platform. Then, the government would take that information and charge the driver of that vehicle for his specific road use.

The Oregon concept has been derided as discouraging the purchase of fuel-efficient vehicles, while at the same time invading personal privacy in a Big Brother sort of way. Whitty believes it will do neither of those things. "All of the opposition is based on unknowns at this point," he said. "In fact nothing's even officially been proposed yet."

The amount of variance that any kind of tax (gas or mileage) adds to the overall cost of a gallon of gas, Whitty says, is so small, that it would likely have little effect on an individual's decision to buy a more fuel-efficient vehicle. If the average U.S. gas tax is 47 cents per $3 gallon of gasoline, that extra $2.53 still represents a significant incentive to buy a more fuel-efficient (or even fuelless) car. Furthermore, Whitty says, the mileage-tax concept is adaptable enough that fees could be lessened for cars that have features such as lower emissions, or that use alternative fuels or cross a certain fuel-efficiency threshold.

In terms of protecting privacy, Whitty says the Oregon concept has mutated over time and now specifically includes the flexibility to offer citizens the choice of level at which they want to participate and, therefore, to choose how much privacy they are willing to give up. "The original Oregon mileage-fee pilot program operated as a closed system," Whitty says. "People were required to use our equipment and it worked efficiently, but it was closed and it wasn't flexible enough to adapt to future changes. We thought the system should be more open with aftermarket in-vehicle devices. The system wouldn't care about how it was generated, it would only care that the data arrive with a certain amount of accuracy and in a certain format at the central computer."

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After eight years of development and pilot projects, the Oregon Mileage Concept has been judged a success by the state, Whitty says. It collected the data the state needed to fully implement a mileage tax and transmitted that data successfully. Even so, there is not yet any proposal on the table to make the mileage tax a reality in Oregon and, Whitty says, even if it does gain traction within the Oregon legislature, an actual change of law is many years away.

Nonetheless, earlier this year Blumenauer saw the success of the Oregon pilot project and decided to introduce a bill (HR 3311) that requests appropriations of $154 million to do research on deploying a mileage tax on a nationwide level. The bill is just five pages long and calls for funds to do some research, yet it has already spawned a hailstorm of criticism. Most of the criticism has been aimed at topics that the bill doesn't address, such as the use of government-controlled GPS tracking devices in cars--an idea that the architects of Oregon's concept have dismissed as an option.

I'm a backer of the mileage tax concept and, for now, think that it is the most equitable and adaptable way to fund highway repairs and upgrades. But regardless of the final outcome of this particular bill, the U.S. is facing a future where proper funding for our roads is in peril. What mileage tax researchers need to ask now is, what lessons can we learn from Oregon's mileage-tax pilot program and how do these differ from "everyday" toll systems like the New Jersey Turnpike? Is there a better, fuel-agnostic way to tax America' highway use?

As the national debate on this topic continues, it is clear that we will need to find a way to pay for our roads that reflects the American right to privacy while continuing to encourage a shift away from traditional sources of energy--and our dependence on foreign oil. With so much at stake, it's going to make for a lively debate.

Nick Chambers is the Editor of Gas 2.0, a website that digs into the world of biofuels and fast-paced transit, exploring the technologies and substances that are the future of transportation. He has undergraduate and graduate degrees in the earth sciences and previously worked as a pavement design specialist for the Oregon Department of Transportation.